Directed by: Renny Harlin
Starring: Robert Englund, Brooke Bundy, Lisa Wilcox, Rodney Eastman, Andras Jones, John Beckman, Kisha Brackel, Wanda Bursey
Alice shows Freddy his reflection with a shard from a glass window in a church and all the souls that Freddy stole reach their hands out, restricting Freddy and rips his skull apart to free the souls. Alice and her boyfriend survive. Alice sees Freddy in a reflection in water.
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Continuity mistake: At Rick's funeral, Debbie gives Alice her spike bracelet. The spikes are flat and there aren't that many of them, but at the end when Alice is getting decked out to fight Freddy she pulls the bracelet out of her drawer, and the spikes are very menacing looking and there are more of them. (00:55:25 - 01:13:20)
Freddy Krueger: Sayonara, Rick-san.
Trivia: The diner that Alice works at is called the "Crave Inn", probably a nod to Freddy creator Wes Craven.
Question: Why does Freddy use Alice to gain access to new victims?
Answer: He'd killed her friends in the previous movie, remember? When he came back she'd had time to recover and make new friends.
That was Kristen, not Alice. Alice gives the answer to this question herself, while talking to Dan in the diner. She says that Kristen was the last of the children of the people who killed Freddy, and "maybe Freddy can't get to the new kids unless there's someone to bring them to him."
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Answer: As Kristin was being burned to death in the boiler, she passed her ability to pull other people into her dreams to Alice. This enabled Freddy to get new victims.